Picture this: a cool million bucks landing in your Venmo, making life a breeze. Bummer alert: the chances of that happening are zilch (and, well, Venmo can’t handle that kind of dough anyway).
But hey, just because our dreams of striking it rich overnight are a long shot, doesn’t mean we can’t handle our dough like the millionaires do. We won’t be serving up advice on scooping up heaps of Apple stocks or selecting the ultimate yacht. Rather, these are straightforward financial moves that any non-millionaire can make today.
In this post, we will be sharing 5 money secrets rich people live by.
🤫 Let’s fill you in on the secret
#1: YOU WON’T GET RICH OFF ONE SALARY ALONE
Having more than one source of income is like having multiple streams of water flowing into your bank account. Just like how a river with multiple streams is stronger and more stable than a river with only one, having multiple sources of income makes you financially stronger and more stable.
It means that if one stream dries up or slows down, you still have other streams that can keep you afloat. Plus, having multiple streams of income gives you more opportunities to earn and grow your wealth, which can lead to financial success in the long term.
Picking up a side hustle is a great way to start. Think about some of your skills you have currently that you can monitize.
#2: INFLATION STEALS YOUR WEALTH – PROTECT IT!
Inflation is like a sneaky thief that steals the value of your money over time. Putting your money in a regular savings account is like leaving it out in the open for this sneaky thief to steal. The interest rate on a regular savings account is usually low and may not keep up with the inflation rate, which means that the value of your money may actually decrease over time.
But, there’s a way to outsmart this sneaky thief. By putting your money into investments or a high-yield savings account, you can earn more on your money and make your money work for you. A high-yield savings account offers a higher interest rate than a regular savings account, which can help your money grow and keep up with inflation.
#3: BUY ASSETS NOT LIABILITIES
I used to be like most people and thought assets were anything that had a cash value. But boy, was I wrong! If you really want to become wealthy, you have to treat your household finance like a business. That means thinking about what will bring in cash flow for you in the future.
Picture this: when you invest in assets, it’s like planting a seed that grows into a tree that bears fruit. This tree will keep producing fruit for years to come, just like your assets will keep generating income or growing in value over time.
But when you buy liabilities, it’s like buying a flower that only blooms for a short period of time and then dies off. Sure, it may look pretty at first, but it won’t provide you with any ongoing benefits like your assets will.
So, the idea of buying assets instead of liabilities is all about investing your money in things that have the potential to grow your wealth over time, rather than just spending it on things that don’t provide any return. By focusing on assets, you can build your wealth and enjoy the fruits of your labor for years to come.
#4: NEVER SPEND MORE THAN YOU MAKE
It’s a basic rule of personal finance that you should never spend more than you make. And let me tell you, there’s a good reason for that. If you’re constantly spending more than you earn, you’re going to end up in debt and with a whole lot of financial stress.
Now, I know it can be tough to keep track of your spending, which is why I’m a big advocate for using a budget. By creating a budget, you can see exactly where your money is going and make adjustments where you need to.
But here’s the thing: creating a budget is only half the battle. The other half is sticking to it! That means making sure that you’re not spending more than you make each month. It may require some sacrifices and tough choices, but trust me, it’s worth it in the long run.
#5: PAY YOURSELF FIRST
The “Pay yourself first” plan as an effective way to ensure consistent savings. Studies on saving show that only a few Americans follow to the “pay yourself first” rule. The Federal Reserve has reported that in 2019, which is the latest year for which figures are available, less than 40% of Americans were able to pay for a $400 emergency in cash. 😳
Setting aside a portion of your income for savings before paying bills, to avoid spending that money on other things is key. This method can help you build a nest egg for long-term financial goals, build up your emergency fund and can also be applied to retirement accounts or investment accounts.
🧋 Taylor’s Toolkit
I used to spend all my money on things that only made me happy in the moment. But then I learned about the method of paying myself first! This helped me avoid spending too much and not having enough left for important things like emergencies or retirement.
Paying yourself first is one of my favorite methods because it makes you think about the big picture. When I save first, I have less money to spend, so it helps me avoid buying things I don’t really need. One thing that has really helped me reach my money goals is automating my finances.
Automation is super easy – you can set up your paycheck to automatically put some of your money into a savings account or retirement fund. You can even use an app or log onto your bank’s website to set up automatic transfers from your checking account to your savings account or IRA. It’s a simple way to make sure I’m saving for the future while still enjoying the present!